Task Force on Middle Class Working Families

Sent to Jan 30, 2009 to Vice President Biden via www.strongmiddleclass.gov CC: President Obama (via whitehouse.gov), Senator Dick Durbin, Congresswoman Melissa Bean, Congressman John Boehner (House Minority Leader), Senator Mitch McConnel (Senate Minority Leader), Congressman Steny Hoyer (House Majority Leader), Speaker Pelosi, Senator Harry Reid (Senate Majority Leader)


Dear Vice President Biden,

Congratulations on your appointment to lead the Task Force on Middle Class Working Families.

I too firmly believe that a strong middle class is the only future for America’s long-term prosperity. The middle class is the “consumption engine” of the U.S. economy; therefore there is no hope for sustained economic strength without a strong middle class.

I have been in management roles for the last eight years of my career and I know from first-hand experience that the middle class has been going backwards. A 3% annual raise has not kept up with the cumulative effects of inflation, rising energy prices, rising healthcare costs and rising education costs. The middle class has, indeed, been going backwards.

As you have pointed out, the most recent economic expansion did nothing to help the standing of Middle America. Despite strong productivity increases, record corporate profits, healthy dividends and ballooning executive compensation, the middle class continued to go backward.

This letter addresses four topics: definition of middle class, the productive role of organized labor, supporting the non-union middle class, needed cultural changes within corporate America.

1. Definition of Middle Class
Most politicians talk about the importance of the middle class, but none define what “middle class” means. I feel that the establishment of a working definition of “middle class” is essential for the effective function of your Task Force.

The problem with the term middle class is that is encompasses so many Americans: construction works, law enforcement, sales professionals, middle managers, accountants, factory workers, university professors, journalists, warehouse managers…the list of potential professions and families that comprise the middle class is endless.

This economic classification includes the most, as well as the least educated Americans. The middle class includes Americans with strong upward mobility potential, as well as Americans whose futures look less promising if current career paths are continued. The middle class includes families and individuals who are quite effective at personal/household financial management, as well as individuals and families who live dangerously beyond their means.

For the sake of reasonable policy creation, I believe that a working definition of “middle class” must include a computation of household size and the geographic location of the household. Geographic consideration is an absolute necessity as a reasonable household income in the Chicagoland area (where I live) needs to be considerably higher than the household income of a family living in rural Kansas for example.

Without a reasonable definition of “middle class” no one will know what the Task Force’s discussions and purposes are really about. A definition is also necessary for the transparency you seek to achieve.

2. Productive Role for Organized Labor
In many ways the labor movement and labor unions themselves have gone horribly wrong. Labor unions are businesses just like any other and have gotten greedy and self-interested over the years. The purpose of labor unions, in my opinion, should be to ensure safe and fair working conditions and to promote employment security for its members.

There is an important distinction between job security and employment security that unions (and too many Americans) don’t seem to understand. Many unions, particularly the UAW, have focused on job security and have worked to try to ensure continued pay checks for labor that is no longer needed. Within an environment of global competition, no company can successfully and profitably operate with the burdens of job pools and other mechanisms that do not allow for efficient labor resource management.

A focus on employment security, on the other hand, calls for assuring that workers have current and ever expanding skill sets. A focus on employment security is the difference between having or not having a job and having a career.

Too many Americans and labor unions have focused on having jobs, not on building careers. The skill sets of many Americans are out of date and the reality is that they are not needed in the job market of today. On the other hand, I know of many companies that cannot find workers with the skill sets they now require.

Labor unions have the organizational structure to facilitate the dissemination of continuing education—either directly providing these education services and/or providing the infrastructure for other organizations to provide the needed education.
Labor unions will be relevant and productive in today’s labor market if and only if one of their top priorities is ensuring that their members have the skills needed today—not the skills needed 20-30 years ago.

Labor unions also need to be reasonable. Given ever increasing life expectancies, today’s workers cannot reasonably expect to retire at 48, 58 or 62 with full benefits. No pension system (social security or corporate pensions) was designed to support a 20-30 year retirement. Workers with physically demanding jobs likely cannot perform these jobs as they age. Therefore, unions need to be a key resource and conduit for establishing worker-union-corporation partnerships to redirect workers’ for needed purposes.

Although unions have provided productive outcomes in recent years, the negative light in which managers and executives view unions is much deserved.

I question whether or not you would bristle at the necessity to pay a union electrician (Teamster) $150.00 to plug in a light at McCormick Place in Chicago. No, not skilled electrical wiring that can only safely be done by a licensed electrician—just plugging a light into a power strip. If there is a prayer for organized labor and corporations to have effective partnerships, this kind of nonsense must be forced to stop.

3. Supporting the Non-Union Middle Class
As you well know, there are millions upon millions of non-union middle class Americans. These Americans are also grappling with stagnating and regressing standards of living. The three keys for these Americans, I believe, are fair taxation policies, affordable education and affordable healthcare (these three areas are key for union employees as well).

Within this discussion I would like to focus on education. I believe that it is vital for our pre-school and K-12 education systems to be overhauled in order to assure America’s continued competitiveness on the world stage. The simple fact is that our education system is in disarray, is inefficient/ineffective and we are falling dangerously behind.

Our universities continue to be the envy of the world, but are becoming less and less affordable for many Americans. Without a college education, most of our youth have little chance for a prosperous life. I have an 11-year-old stepson. I recently calculated that it will cost approximately $130,000 to fund his Bachelors degree at the University of Illinois (an in-state school). This is ridiculous. The two questions that surface in my mind are: Are we funding state universities properly AND are state universities managing their money properly with the proper priorities?

Finally, we need affordable adult continuing education programs and education outlets. The world is changing too quickly to permit adults to graduate from high school or college and never step foot in a classroom again. Community colleges can and do fill some of this need, but I believe that this is an issue that needs to be studied carefully. The current programs at many community colleges are part of the answer, but not a complete answer.

4. Needed Cultural Changes in Corporate America
This is the toughest issue to tackle. The reality is that corporate America has become greedy. Attractive quarterly earning statements and annual reports are far more valued that quality corporate management. Corporate America is solely rewarded for today, next month and next quarter. These pressures make good people do really unproductive, and in some cases, bad things.

As a society, we must learn how to celebrate and reward long-term interests and sound business practices. In my view, sound business practices include fair treatment of employees—allowing everyone to enjoy the fruits of a successful team effort.

Vice President Biden, I hope that some of my insights are productive and are considered as you steer the directions of the new Task Force.

I wish you the best of luck on this most important journey.

Sincerely,

Tonia Becker VerShaw
Grayslake, IL
www.toourleaders.blogspot.com

Economic Recovery Plan Comments

Posted 1/10/208 to http://change.gov/agenda/economy_agenda --"Submit Your Ideas" portion of the site.

Dear President-Elect Obama, Vice President-Elect Biden and Economic Policy Transition Team,

I am excited, hopeful and thankful that such a dedicated and intelligent group has been assembled to lead our nation in these very challenging times.

However, as President-Elect Obama stated within his election night speech, there will be times when we disagree and/or question each other viewpoints. Overall, I believe that the stimulus plan, as currently outlined, is a strong strategy. I strongly believe that infrastructure investment will create jobs and help to get the economy moving again. I love the proposed investments in building the renewable energy industry, education and modernizing healthcare information management.

If managed and structured properly, I believe that these investments will move our nation forward in terms of managing the crisis in the short-term and for long-term prosperity.

In terms of the proposed $3,000 tax credit to businesses for each employee hired, I do not know whether this plan component will work. The arguments on both sides of this issue make sense to me, but I believe that this plan component is worth a try. It may not work, but we cannot progress without some level of experimentation.

I do have strong reservations about the $500 individual, $1,000 family tax credit. This may be a necessary political concession to the Republicans, who as a generalization seem to embrace this type of approach. If this program component is necessary for Republican support to get the rest of the plan through, so be it. However, I strongly question the merit of this program component as it is currently being discussed. Don’t get me wrong, from a selfish standpoint; I will take the gift—what household would not like to have an extra $1,000? However, my household is currently lucky enough to earn a comfortable living, but is below the $200,000 household income level being proposed. I consider us blessed. Frankly, an extra $20.00 in my bi-monthly paycheck is not going to impact my spending habits. As a household, we are not going to rush out with our extra $80.00 per month to buy additional goods or services.

The following are my ideas for reallocating the proposed spending for this portion of the program:

1. Reduce the household income level qualified to receive the credit and increase the credit to those qualifying households. It is my suspicion that a struggling family of four with a household income of $60,000-$70,000 would benefit from an extra $80.00 - $150.00 per month in their pockets. Republicans are going to scream that this is socialistic income redistribution, so maybe this idea would not work in practicality.

2. Structure payment of the credit so that it has to spent on goods and services (I see no way for this to work in practicality).

3. Use the funds in a manner that would help families stay in their homes—restructuring mortgages, etc.

4. Use these funds to further fund infrastructure, education and renewable energy investments.

I certainly do not have “crystal ball” ideas for improving this crisis, but possibly there is some merit to my thoughts.

Sincerely,

Tonia Becker VerShaw

Grayslake, IL

Bailout Management

Sent to Congresswoman Melissa Bean and Senator Dick Durbin, November 13, 2008

First I would like to congratulate you on your re-election. With the re-election of you and Dick Durbin, as well as the election of President-Elect Obama, election night was a thrilling evening.

During this campaign season I made the promise to myself to become more involved in our democracy. One of the greatest privileges Americans enjoy is the ability to contact our elected officials with our opinions, concerns and praise. Therefore, you will be hearing from me on a regular basis.

This being said, I am quite concerned about the execution path of the bailout bill. I believe I share the views of many Americans. In my opinion, the need to pass the bailout bill was a highly undesirable position, but necessary given the circumstances.

From my understanding, the bill called for active congressional oversight. This oversight does not appear to be happening. The situation is starting to carry the "stench" of much of the rest of the Bush years--do what we want and there is no need to keep the American people informed of our decision-making process, no need to tell anyone what we are actually doing.

This is entirely unacceptable and I ask that you do what you can to speak out in opposition to the situation.

Granted, the financial dilemma America faces is highly complex. Despite being a relatively sharp person, I can't even pretend to understand all of the complexities. It is probably safe to say that very few really have the background and the knowledge to have solid insight on the situation.

I can say with reasonable deal of certainty that I do not support bailout funds being used to fund acquisition activity, to fund employee (especially top executive) bonuses, nor to prop up shareholder dividends. This being said, if non-partisan experts believe in good judgment that it is appropriate to use bailout funds for the above mentioned purposes, I would want objective information as to why supporting these activities will help our overall economic situation.

The Bush administration has continually supported measures that allow money to swirl at a frenetic pace at the very top levels of our economy. The last eight years have almost been like the richest 3% of our population has been standing in a giant money booth (like you sometimes see at the fair)--money swirling around and this top 3% stuffing money in their pockets as fast as possible. However, the "money booth" of the last eight years contained monetary denominations much larger that one dollar bills.

$700 billion is a great deal of money and it cannot continue to be spent with Congress and the American people sitting in the dark. The stakes are just too high.

On another note, I have very mixed feelings about the prospects of bailing out the American auto industry. In recent times, the big three have been three of the most poorly managed companies in our economy. Should this poor management be rewarded without very core changes in operation? We will be in the same situation a year or two from now. On the other hand, can we afford to lose the hundreds of thousands of jobs attached directly and indirectly to the US auto industry right now? I don't know.

This also needs to be a public dialog backed by objective, smart, non-partisan information.

I would like to leave you with two final thoughts. One of the positive results of the mess that our country has inflicted on ourselves is that I am one of millions giving active thought as to how we can correct our current challenges. The following two thoughts are simple and maybe are obvious, but maybe there is some truth shrouded in simplistic notions.

1. We cannot allow corporate America to continue to privatize profit and socialize risk. The Wall Street that lobbies actively for deregulation and laissez-faire practices when times are good is the same Wall Street that is streaming to Capitol Hill with hats in hand. We cannot have it both ways and expect that our country will prosper.

2. If we have corporations that are truly “too big to fail,” perhaps corporations should not be allow to get that big. Or, at least not allowed to become “too big” without adequate capital and liquidity to navigate through economic downturns. I have no idea how this idea could be structured in a way that supports fair free-markets (emphasis on fair), yet protects the American economy from a handful of companies bringing our entire economy to its knees. Although, I have no idea how this idea could be structured, I do believe that there is merit to the thought.

Continued success as you head into your new term. We have many, many challenges before us. But, I feel confident that we can overcome them if politics is pushed aside and we all work to do what is best for the long-term health of our nation as well as to address the short-term crisis.

Sincerely,

Tonia Becker VerShaw